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Persuading to participate: Coordination on a standard

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  • Balzer, Benjamin
  • Schneider, Johannes

Abstract

We study coordination among competitors in the shadow of a market mechanism. Our main example is standard setting: either firms coordinate through a standard-setting organization (SSO), or a market solution—a standards war—emerges. A firms veto to participate in the SSO triggers a standards war. Participation constraints are demanding, and the optimal SSO can involve on-path vetoes. We show that vetoes are effectively deterred if firms can (partially) release their private information to the public. We discuss several business practices that can serve as a signaling device to provide that information and to effectively ensure coordination.

Suggested Citation

  • Balzer, Benjamin & Schneider, Johannes, 2021. "Persuading to participate: Coordination on a standard," International Journal of Industrial Organization, Elsevier, vol. 78(C).
    • Handle: RePEc:eee:indorg:v:78:y:2021:i:c:s0167718721000576
    DOI: 10.1016/j.ijindorg.2021.102764
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    More about this item

    Keywords

    Innovation; Standard-setting organizations; Patents; Persuasion; Coordination;
    All these keywords.

    JEL classification:

    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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